In Ramdas Sitaram Patil vs ACIT, Central Circle, Kolhapur, the Income Tax Appellate Tribunal has held that one could claim deduction under Section 54 and 54F of the Income Tax Act simultaneously.

The appellant, an individual, filed the Return of Income for the 2016-17 declaring total income of ₹96,55,810. However, the assessing officer (AO) disallowed a claim for deduction.

The AO had denied the claim for deduction under Section 54 and 54F of Income Tax Act, 1961, stating that no deduction can be claimed simultaneously in respect of the new residential house and the new residential property was purchased before one year prior to the sale of original asset.

The Tribunal said: “Admittedly, the sale consideration was paid prior to the one year before the sale of original asset. There is no bar under law to claim deduction simultaneously Section 54 and Section 54F in respect of the same asset. The crucial fact which needs to be determined in the present case is the date of purchase of the new residential property. It is settled position of law that the crucial date for the purpose of determination is when the property is purchased for the purpose of Section 54 and the date when the possession and control of the property is given to the purchaser’s hands.”

Placing an earlier Bombay High Court decision in the case of CIT vs Dr Laxmichand Narpal Nagda, the Tribunal noted that it had been previously held that “the term “purchase” employed in sub-section (2) of section 54, is not used in the sense of legal transfer and therefore, the holding of a legal title within a period of one year is not a condition precedent for availing deduction under Section 54.

“We are of the considered opinion that the appellant is entitled for deduction us/.54/54F as claimed by the assessee,” it said.

Published on August 25, 2024